Possibility of Baltimore Sun sale brings interest from investors

Jamie Smith Hopkins, The Baltimore Sun

The possibility that the Tribune Co. will sell its newspapers after an imminent exit from bankruptcy has set off a new round of speculation about The Baltimore Sun's future ownership — along with expressions of interest from potential buyers.

Bloomberg and Reuters, citing unnamed sources, reported this week that Chicago-based Tribune is preparing to sell its newspaper companies. Bloomberg said Tribune is interviewing advisers for a potential sale; Reuters said Tribune plans to focus on its television stations.

Several investors expressed interest in Tribune's newspaper holdings, which include the Los Angeles Times, Chicago Tribune and Hartford Courant. Locally, David S. Cordish, chairman of the Baltimore-based Cordish Cos., which owns properties such as Power Plant Live and the Maryland Live Casino, said he is considering the idea of buying The Sun.

It's too early to speculate what might happen, said Howard Marks, chairman of Oaktree Capital Management, a senior creditor that will become Tribune's largest shareholder after the bankruptcy. He said he has no idea of any plans for The Sun, and noted that Tribune doesn't even have a new board or CEO yet. They will make the decisions about the company's future, he said.

Marks said Oaktree does not comment on its individual investments and wouldn't say what its exit strategy might be regarding Tribune. "We are just getting into the ownership position, and it's far too early to talk about getting out," he said.

In an interview with the Chicago Tribune in October, Marks said it was unlikely that Tribune will make any immediate divestitures, although, he added, that wouldn't be surprising if that happened a year down the road.

Big-city newspapers have struggled in recent years with the recent recession and increased competition online for readers and advertisers. Many responded by charging for access to their websites — The Sun, for example, has more than 26,000 digital subscribers. Its average print circulation exceeds 290,000 on Sundays and 165,500 on weekdays.

The Sun is part of the Baltimore Sun Media Group, which includes 17 community newspapers, nine companion websites and seven magazines.The company also boosted revenue by expanding its commercial printing and distribution operation, which handles a number of other publications.

Plummeting newspaper prices are a lure for investors — and for some potential buyers, a purchase would be deeply personal.

Cordish said he's a newspaper person and reads at least five a day.

"The Paper very much needs to be in the hands of local ownership," Cordish wrote in an email. "We would be interested. … The City and Region MUST have a strong vibrant paper of its own."

Farther afield, the publisher of the Orange County Register in California — whose investment firm purchased the paper this summer — has expressed interest in the entire Tribune newspaper portfolio.

Register Publisher Aaron Kushner, who also serves as CEO of parent company Freedom Communications, has astonished the industry by emphasizing the print product over digital, and delighted journalists by kicking off a newsroom hiring spree after years of layoffs. He said by email Wednesday that The Sun "is a proud and invaluable institution … and we have the interest and means, should the new owners decide that they want to sell."

Kushner added: "We will only step in if we are confident after diligence that we can bring our contrarian approach and belief system to Baltimore and successfully reverse the downward trends in newsroom staff, circulation and advertising. That is a monumental challenge, an affirmative answer to which is far from certain."

Tribune and The Sun declined to comment about the sale reports.

One longtime suitor of The Sun is a loose group of potential investors organized by the Abell Foundation, itself founded by the family that launched the Sun in 1837. For years, representatives have expressed interest to the Tribune and asked if it was willing to sell.

Ted Venetoulis, a publisher and former Baltimore County executive who is involved with that group, said Wednesday that he last checked in with Tribune a few weeks ago.

"But they've not indicated … if the paper's for sale or what their next step is," he said. "At least not to us. Maybe to Rupert."

He meant Rupert Murdoch, whose News Corp. owns The Wall Street Journal, the New York Post and the Fox cable news operation, among other media properties. News Corp. declined to comment on whether it is exploring a deal for Tribune's newspapers.

The Washington Post Co. also declined to comment on any potential interest in buying The Sun.

And calls to Warren Buffett's Berkshire Hathaway Inc., which owns a stake in The Post and has recently been buying newspaper companies at low prices, went unreturned on Wednesday and Thursday.

Venetoulis, who once owned weekly newspapers such as the Towson Times and who still works in publishing, cautioned that there's no guarantee a local group would purchase the newspaper even if Tribune decides to sell it individually. Papers across the country are experimenting with new business models — from online subscription fees to less-than-daily publication— but no one knows yet what will work, he said.

"There may well be continued interest in bringing the paper under local ownership, but there's not certainty in that because of the nature — the new nature — of the business," Venetoulis said.

A leader of The Sun's largest employee union also pointed to partial employee ownership as a possibility. The Portland Newspaper Guild sought investor groups to buy the Portland Press Herald and Maine Sunday Telegram in 2008, ultimately negotiating an employee stock ownership plan to get an ownership stake.

The Washington-Baltimore Newspaper Guild, which represents many Sun workers, said it hasn't talked with potential buyers yet. But Cet Parks, the guild's executive director, pointed to Maine as "a template for where we could go."

The guild held a strategy meeting Wednesday to prepare for Tribune's exit from bankruptcy — expected by the end of the month — and the possibility of a sale.

Larry Grimes, president of W.B. Grimes & Co., a Gaithersburg media broker, said he thought The Sun's "pretty good circulation" and dominant position among local media might bring interest from private equity firms.

Still, there's value and then there's value, which is why he suggested Tribune sell its papers' real estate holdings separately.